UK motor policy inflation eases through Q4, still up 41% y/y
UK motor insurance policy inflation eased throughout the fourth quarter, coming down by 1.4 percentage points (pps) in December and 7.3 pps for Q4 to a still-heady 40.9% annual inflation rate.
That disinflationary trend picked up from November after inflation on auto policies peaked in July at just under the 50% mark, data from the UK’s Office for National Statistics showed.
Auto claims cost inflation remains comparatively muted, with repair cost inflation stable in the upper single-digits, spare parts holding a mid-single digit range and used cars still in ever-deeper deflation.
Policy price inflation is not only running above current claims cost inflation, but has long since recouped pandemic era shortfalls to far outpace costs.
Marked against pre-pandemic levels at end-2019, insurance premiums have risen 63.5%, versus 24.8% growth in hospital care costs, 23.5% growth in repair costs, 19.9% growth in used vehicle prices and 17.2% growth for spare parts.
Against an even blend of those four cost categories, premium growth from pre-pandemic levels has beaten aggregate claims cost growth for 11 months running, now by an eye-opening 42.2 percentage points.
The UK's broader Consumer Prices Index (CPI) rose by 4.0% in the 12 months to December 2023, up from 3.9% in November, and the first time the rate has increased since February 2023.
A separate measure including owner occupiers’ housing costs (CPIH) rose by 4.2% in the 12 months to December 2023, matching the reading from November.
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